Corporate policies of republican managers

Irena Hutton, Danling Jiang, Alok Kumar

Research output: Contribution to journalArticle

60 Citations (Scopus)

Abstract

We demonstrate that personal political preferences of corporate managers influence corporate policies. Specifically, Republican managers who are likely to have conservative personal ideologies adopt and maintain more conservative corporate policies. Those firms have lower levels of corporate debt, lower capital and research and development (R&D) expenditures, less risky investments, but higher profitability. Using the 9/11 terrorist attacks and Sept. 2008 Lehman Brothers bankruptcy as natural experiments, we demonstrate that investment policies of Republican managers became more conservative following these exogenous uncertainty-increasing events. Furthermore, around chief executive officer (CEO) turnovers, including CEO deaths, firm leverage policy becomes more conservative when managerial conservatism increases.

Original languageEnglish (US)
Pages (from-to)1279-1310
Number of pages32
JournalJournal of Financial and Quantitative Analysis
Volume49
Issue number5-6
DOIs
StatePublished - Jul 7 2014

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Corporate policy
Managers
Chief executive officer
Profitability
Conservatism
R&D expenditure
Investment policy
Turnover
September 11 attacks
Bankruptcy
Corporate debt
Ideology
Uncertainty
Natural experiment
Risky investment
Terrorist attack
Political preferences
Leverage

ASJC Scopus subject areas

  • Finance
  • Accounting
  • Economics and Econometrics

Cite this

Corporate policies of republican managers. / Hutton, Irena; Jiang, Danling; Kumar, Alok.

In: Journal of Financial and Quantitative Analysis, Vol. 49, No. 5-6, 07.07.2014, p. 1279-1310.

Research output: Contribution to journalArticle

Hutton, Irena ; Jiang, Danling ; Kumar, Alok. / Corporate policies of republican managers. In: Journal of Financial and Quantitative Analysis. 2014 ; Vol. 49, No. 5-6. pp. 1279-1310.
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